China, Japan start 7th round of strategic dialogue in Beijing
2007-01-25 Xinhuanet
Beijing - The vice foreign ministers for China and Japan smiled and traded jokes prior to the start on Thursday of the 7th round of strategic dialogue -- a sure sign of warming relations between the two countries. Chinese Vice Foreign Minister Dai Bingguo and Japanese Vice Minister for Foreign Affairs Yachi Shotaro head the two delegations at the three-day meeting. "As participants in the dialogue, both of us are happy about the positive changes in bilateral ties," Dai told Shotaro before their closed door meetings began. Echoing Dai's views, Shotaro joked that it was the first time that he smiled while talking with Chinese officials at the strategic dialogue. The first round of the strategic dialogue was held in Beijing in May 2005. "China-Japan strategic dialogue was initiated at a time when bilateral relations were faced with great difficulties," Dai said in his opening remarks in Diaoyutai State Guesthouse. "The strategic dialogue played a role in removing political obstacles in bilateral relations and getting the relations back on track," Dai said. Japanese Prime Minister Shinzo Abe made a landmark visit to China last October, the first since Abe took office last September. Abe's visit was widely seen as a "turning point" in China-Japan relations. Both Dai and Shotaro said they still bear "heavy responsibility" in promoting China-Japan ties. The two delegations to the dialogue consisted of some 20 Chinese and Japanese officials. Later on Thursday, Chinese Foreign Minister Li Zhaoxing also met with Shotaro. "These (talks) provide an important opportunity for progress in bilateral ties," Li said, urging the two countries to make joint efforts to advance relations. The foreign minister urged Japan to observe the three China-Japan political documents and properly resolve the "sensitive" issues. Chinese Foreign Ministry spokesperson Jiang Yu on Thursday said the strategic dialogue was an important channel to carry out the consensus of top leaders of the two countries.

Hu's Africa visit to build on summit
2007-01-24 People's Daily Online
President Hu Jintao's visit to Africa next week will follow up on action taken at the China-Africa cooperation summit held in Beijing last year, said analysts yesterday. Chinese investment in Africa has reached new highs in recent years, highlighted by Hu's two previous trips to the continent since he took office in 2003. His third trip, beginning next Tuesday, is intended to broaden the nation's reach and strengthen ties with the continent. The 12-day tour will cover Cameroon, Liberia, Sudan, Zambia, Namibia, South Africa, Mozambique and Seychelles. The trip follows 3-nation tours in 2004 and April last year. Analysts say the upcoming trip, Hu's first overseas mission of 2007, will demonstrate that Africa is high on China's diplomatic agenda. [...] China's diplomatic drive in Africa in 2007 started with Foreign Minister Li Zhaoxing's seven-nation tour of mostly smaller countries from December 31 to January 8. In recent years it has become a tradition for new foreign ministers to start their tenures with a tour of African nations. A series of visits including the president and premier's respective African trips thrust China-Africa relations into the media spotlight at home and abroad last year. The events reached a climax in November with the Beijing Summit of China-Africa Cooperation Forum, attended by the leaders of more than 40 African nations. At the summit, China proposed an eight-point package to support African development, including reducing debt, cutting tariffs on African imports, increasing aid, improving vocational training and increasing investment. [...] Economic and trade cooperation with Africa covers much more than just oil and raw materials supplies, said analysts. Observers said the strategic partnership features cooperation in areas such as telecom, food processing, tourism and infrastructure, paving the way for Africa to become a processor of commodities and a competitive supplier of goods and services to Asian countries. Addressing the Shanghai National Accounting Institute last Friday, Harry G. Broadman, an economic adviser with the World Bank, said China's trade with and investment in Africa presents a significant opportunity for growth and integration of sub-Saharan nations into the global economy. He said trade and investment between developed countries and Africa in the past has concentrated on natural resources, whereas China was helping Africa's economy diversify. China's recent reduction on tariffs for African goods had been particularly beneficial for the continent, he added.

Hu to discuss Darfur on Sudan visit
2007-01-25 China Daily
President Hu Jintao will discuss the situation in Darfur with Sudanese leaders on his state visit to the country, part of his 8-nation Africa tour starting the end of this month, a senior Foreign Ministry official said yesterday. Hu and Sudanese President Omar al-Bashir will exchange views on Darfur, Assistant Foreign Minister Zhai Jun told reporters in Beijing. "The visit will not only help boost China-Sudan relations, but also promote peace and stability in Darfur," said Zhai. Hu's Africa tour will take him to Cameroon, Liberia, Sudan, Zambia, Namibia, South Africa, Mozambique and Seychelles between January 30 and February 10. "China has been playing a positive role in resolving the situation in Darfur," said Zhai. "We sincerely hope for national reconciliation in Sudan and the peace and stability it brings as soon as possible." Progress is being made in Darfur and the Sudanese government has an active attitude to resolving the situation, said Zhai, who visited Khartoum last week. Zhai said the international community should help build peace and stability in Darfur. "Any solution to the situation in Darfur should be made with the consent of the Sudanese government," he added. A resolution should be sought through dialogue and imposing sanctions on Sudan would complicate the issue, Zhai said. According to Zhai, a series of agreements will be signed between China and Sudan during Hu's visit. He would not confirm whether the agreements included energy cooperation. However, he commented, "energy cooperation between China and Sudan is very successful so it is natural for the two countries to sign such deals." Zhai described China's cooperation with African nations as "open, transparent and mutually-beneficial". He rebuffed accusations from western media that China only builds ties in Africa in order to exploit natural resources. Energy resources are only one area covered by the many cooperative projects between China and African countries, said Zhai. He said China only imports around 30 million tons of crude oil from Africa per year far less than some developed countries.

China, Thailand vow to further bilateral ties
2007-01-22 Xinhuanet
China and Thailand Monday pledged to promote friendly relations between the two states. "The Chinese government attaches importance to relations with Thailand, and will, as always, enhance bilateral cooperation to help improve regional peace and development," said Chinese Vice President Zeng Qinghong when meeting Thai Army Commander-in-Chief Sonthi Boonyaratkalin. Sonthi said the Thai government and military would continue strategic cooperation with China. [...]

Credibility lost in space?
2007-01-24 SCMP
On July 27, 1998, China issued a white paper on defence in which it declared: "Outer space should be used exclusively for peaceful purposes to benefit mankind." It added: "China opposes the development of anti-satellite weapons." In fact, this had been Beijing's position since the beginning of the 1980s, when it co-sponsored resolutions in the UN on keeping outer space free of weapons. As recently as last October, when it issued a white paper on its space activities, China asserted that its goals in space are to "explore outer space", "enhance understanding" and "to utilise outer space for peaceful purposes". So it comes as something of a shock to hear it has been developing anti-satellite weapons and, in fact, has fired a ballistic missile into space to shoot down one of its own weather satellites in a test of anti-satellite weaponry. Of course, China is not the first country to test anti-satellite weapons. The United States and the former Soviet Union did this in the 1980s but by conducting this test China has broken a moratorium on aggressive military action in space that had lasted since 1985. Moreover, by doing so it raises questions of its own credibility and whether the world should really believe that its rise will be peaceful. The latest development lends added significance to an incident reported by US officials last August when a US satellite was "illuminated" by a mainland laser to blind it from taking pictures. In the wake of the latest incident, on January 11, the US called the test "inconsistent with the spirit of co-operation that both countries aspire to in the civil space area". Washington and some of its followers have demanded an explanation by China of its action. So far, Beijing has not bothered to explain its actions, although yesterday it did confirm that it carried out the test. It is certainly understandable if China felt a need to catch up with America and Russia, especially since the US has repeatedly refused to negotiate a treaty to ban the militarisation of space. The last time the issue of talks to prevent an arms race in space was brought to a vote, in December 2005, 160 countries voted for the idea, only to be thwarted by the US. And last year President George W. Bush signed a space policy which asserted that the US would "oppose the development of new legal regimes or other restrictions that seek to prohibit or limit US access to or use of space". That is the voice of a unilateralist intent on getting its own way, regardless of other countries' interests. The US hopes that space-based weapons will help the development of a national missile defence programme. If this were successful, it would effectively nullify China's relatively small nuclear arsenal and deprive it of a second-strike capability. Moreover, Beijing's growing number of missiles across from Taiwan could also be nullified if the US were able to use space-based weapons to erect a shield over the island. One question now concerns Washington's reaction to Beijing's demonstrated ability to shoot down satellites. It could well trigger the arms race in space that Beijing has opposed for decades. But perhaps even more important is how China will now be viewed by the rest of the world. Rhetoric over the years has depicted Beijing as being different from other powers - one that espouses moral values rather than power politics. By conducting an anti-satellite weapons test, China may have lost the moral high ground that it has worked so hard to cultivate. This is a high price to pay for whatever military advantage it may have gained. Many countries may now see China as no different from other big powers and conclude that it is, in fact, more devious by trying to hide its true aims behind high-sounding principles. As of now, neither China nor the US looks too good. The only solution is an international treaty that treats all powers equally.

Gov't vows social security net
2007-01-26 China Daily
The central government will establish a nationwide basic social security system by June that will for the first time cover historically neglected rural areas, an official of the Ministry of Civil Affairs said yesterday. At present, provinces, municipalities and autonomous regions operate their own systems. The central government has in the past provided funds only to urban areas. Sun Yang, an official of the ministry's department of subsistence security, said a subsidy scheme and nationwide regulation on basic social security coverage would be unveiled after the annual session of the National People's Congress in March. She did not say how much money the central government would spend on the system. However, she did say the central government would give different subsidies to different areas, with western areas receiving more. In addition to the funds from the central government, local governments will also be required to allocate funds not necessarily at the level provided by the central government to support the system, she said. She said that under the current system, a farmer who qualified for the system received an average of about 33.2 yuan ($4.25) per month. This figure could grow once the central government starts injecting money into the system. The nationwide system will help redress the absence of any sort of social security system in six provinces and autonomous regions Hubei, Yunnan, Guizhou, Ningxia, Xinjiang and Tibet she said. Sun said different parts of the country would be allowed to set their own standards for those who qualify for the system. For example, in North China's Inner Mongolia Autonomous Region, farmers who earn less than 625 yuan ($80) a year and herdsmen who earn less than 825 yuan ($106) on average are entitled to minimum social security. By contrast, East China's Fujian Province draws the line at 1,000 yuan ($128). [...]

Financial policies set at major meet
2007-01-22 China Daily
China unveiled a package of policies to tackle the pressing challenges faced by the financial sector at a top-level conference held over the weekend. Among the key initiatives announced by Premier Wen Jiabao at the two-day National Financial Work Conference which is held every five years were: The three policy banks, which are State-owned lenders that concentrate on meeting the country's economic goals instead of profitability, will be commercialized, starting with the China Development Bank. The other two are the China Export and Import Bank and the Agricultural Development Bank of China. Agricultural Bank of China (ABC) will be restructured. ABC is the only one of the "Big-Four" State-owned banks not listed. "ABC will strengthen its role as a financial service provider for farmers and county-level businesses," Wen said, adding that the restructure would be across the board and the bank's businesses would not be split. The government will push for innovation in providing financial services for rural areas and build a multi-tier rural financial structure. The bond market will receive special attention in the development of the capital market with an emphasis on corporate bonds. Managers of the country's huge foreign exchange reserves are encouraged to "explore new means and extend channels" for the use of the money. Wen admitted that "quite a number of problems exist... we must use forceful means to solve them". He reiterated some constant themes of recent years for the financial sector's development deepening reforms at State banks to enhance their commercial viability, improve the financial markets' depth and sophistication and beef up financial authorities' capability to fine-tune the economy with market-based tools. Wen said the country will steadily advance the financial industry's further opening and promote fair competition between Chinese and overseas institutions. The financial work conference has been held twice before in 1997 and 2002 and both led to substantial reforms.

High time for a strategic national import strategy
2007-01-22 China Daily
As the Ministry of Commerce announced last Monday, the Chinese government is going to increase the country's imports to address the wide concerns at home and abroad aroused by the ever-mounting trade surplus. It is therefore high time for us to figure out a national import strategy. The choices of timing, specific commodities and the means of import may have a major impact on the domestic economy, industrial development and even the country's foreign affairs. By introducing low priced commodities of superior quality, imports could improve the life of consumers. These imports would also intensify domestic competition, promote industrial upgrades and drive less efficient businesses out of the market. An additional benefit, if the country imports commodities with high added value, the trade would play a major role in encouraging an upgrade in China's industrial structure. In the mid-20th century, several Newly Industrialized Economies (NIEs), like Japan and Thailand, tried to import products and equipment with high added value during their early stages of economic development. Based on their studies of these imported commodities, these NIEs did their own research and development to produce even better commodities, which gained their share of buyers throughout the world. In this process, the industries quickly nurtured their capability in research and development. The financial sector also had a good chance to mature and prosper thanks to the booming trade. Compared with these NIEs, China has moved more quickly in starting its high-speed economic boom, putting trade at the center of its export strategy. But this preference also resulted in the slow development of the research and development capability of Chinese industry as well as the inefficiency of the financial system. It would help a lot to eliminate these disadvantages if the national import strategy is developed in alignment with upgrading the industrial structure. A well-planned import strategy will also help the country to purchase the proper amount of resources it needs in its economic development at the proper time with its foreign exchange. As the world's largest importer of soybeans, China buys one-third of the soybeans on the international market every year. Chinese businesses signed huge contracts to buy soybeans between November 2003 and April 2004, when soybeans hit record prices then slumped starting in May 2004. China's soybean processors lost more than 4 billion yuan ($514 million) in the 2003-04 season. Similar cases occurred later in China's petroleum processing business for the same reasons: lack of understanding of the international market and absence of adequate information and guidelines. An exactly targeted import strategy would also be a policy tool coordinated with monetary policy in maintaining sound economic development. Boosting imports would strongly assist the authorities when the foreign exchange reserve grows so big that it threaten the central bank's efforts to control inflation and the excessive liquidity caused by inflows of foreign money increases the bubble in the capital or real estate market. Several traps should be avoided in devising the import strategy. Imported commodities may challenge the country's fledgling industries, especially those demanding high investment in research and development. [...]

Young officials rapidly climb succession ladder
2007-01-25 China Daily
With the convening of the 17th Party Congress this autumn, leadership succession at the ministerial and provincial level is back in the spotlight. By the end of 2006, 14 provinces have completed their leadership succession, and 17 others are expected to complete theirs by the first half of this year. The new round of succession highlights relatively young people, especially those born in the 1960s, who are well educated and possess the required skills. The Organization Department of the Central Committee of the Communist Party of China (CPC) has also designated the proportion of different age groups in the provincial leadership. Specifically, among members of the standing committee of a provincial party commission, there should be at least three members younger than 50 years old, and at least one about 45. According to statistics by the Organization Department, among the members of the reshuffled standing committees of 14 provincial CPC commissions last year, 56 of them were under 50 years old, and 21 of them an average of 45. A number of these high ranking officials at the provincial and ministerial level were born in the 1960s. The 1960s group includes the 46-year-old Acting Governor of Hunan Zhou Qiang, the 44-year-old First Secretary of the Secretariat of the Central Committee of the Communist Youth League of China (CYLC) Hu Chunhua, and the 45-year-old minister of the Ministry of Agriculture Sun Zhengcai. Zhou is the country's youngest provincial governor so far. Wang Wei, professor with the National School of Administration, said: "They were born and raised during the 'cultural revolution' (1966-76). They were educated in an era when knowledge, both science and humanity, was strongly promoted; and they were the first group to grow up together with the country's opening up and reform policy." Wang, who tutored young officials, said they have a broad vision and expertise in social administration. And according to Xu Xianglin, professor with the School of Government, Peking University, another reason behind the emergence of so many young officials is due to the country's determination to cultivate them in the 1980s. Xu said the then leadership made the decision, after foreseeing the trend of social development, and the disadvantages of elderly officials who tended to be too conservative. "Leaders in their 40s have strong political passion and are motivated to realize their goals. This can only benefit the country," Xu said. "Also, the 'cultural revolution' had affected the country's school education system. Unlike those born earlier, those born in the early 1960s were lucky enough to catch up with the resumed university education after 1976. That is why they have risen so quickly," Xu said. Their good academic background and expertise has been one of the key factors to their rapid promotions. For instance, Sun Zhengcai, holds a doctorate degree in agriculture; Xia Yong, the 47-year-old dean of the State Secrecy Bureau, holds a doctorate degree in law; and Pan Yue, the 48-year-old vice-minister of State Environment Protection Administration, holds a doctorate degree in history. "This group of young officials are more pioneering-minded and innovative," said Mao Shoulong, professor with the Renmin University of China. "They are the direct beneficiary of the opening up and reform policy. They have experienced both the old conservative policies and the new ones. They are more flexible, and they bring new a spirit to the country," Mao said. For example, Xia Yong ordered that the death tolls of all disasters should be revealed, immediately after he assumed the power in June 2005. In the past these were kept secret. Another, Pan Yue, has called for the implementation of green GDP, a way of accounting that takes into consideration environmental costs since 2004, when many central or provincial leaders still place too much emphasis on economic development at the expense of the environment. [...] Following the founding of the People's Republic of China, the country's leaders were mainly selected from those who participated in the country's revolutionary wars. With the country's reform and opening-up, emphasis was placed on technological development, paving the way for the promotion of engineers and scientists. However, ever since the 1990s, China's social structure as well as society's expectations have changed greatly. [...] In addition to the rising of 1960s leaders, the recent shift of several officials from the developed areas or the central ministries to the less developed western provinces has also become a focus during the current leadership succession. For example, the posting of the former Guangzhou Party chief Lin Shusen as the acting governor of western China's Guizhou Province last July, and the assignment of former Shenzhen mayor Yu Youjun as the governor of Central China's Shanxi Province in January last year. [...] According to reports in several Chinese language newspapers, by making such rotations, the central government expects these publicity officials to use their expertise to motivate the local residents. However, Xu said the reason behind the appointments is that the central leadership wants to train more versatile high-rank officials. [...]

China may expand visa-free policy for 2008
2007-01-26 China Daily
China's public security authorities on Thursday promised to improve visa application procedures so foreigners involved in the 2008 Olympics in Beijing will find it easier to enter the country. "Anyone with valid Olympic Identity and Accreditation Cards (OIAC) will enjoy visa-free entry into China one month before and after the Olympics," said Li Changyou, deputy director of the Bureau of Exit and Entry Administration with the Ministry of Public Security. The OIAC is a personalized card granted by the International Olympic Committee, which gives its holder the right to attend the Olympic Games for participation or in a work capacity. Li said that China had already relaxed some requirements, including the granting of one-year work permits to people coming to work on the Games in the run up to, and during, the Games. "We will further improve relevant procedures according to the Olympic conventions and charter so that we can guarantee a successful Games," Li said.

China underlines people-centered policy, new development approach
2006-01-25 Xinhuanet
Davos, Switzerland - China will stick to its people-centered policy in its new approach to development, said Chinese State Councilor Hua Jianmin on Thursday. The Chinese government is currently focusing on four areas: promoting economic growth, conserving energy, tackling agricultural and rural problems and encouraging innovation, Hua told a session of the annual meeting of the World Economic Forum. China's economy grew 10.7 percent in 2006 with low inflation, he said, adding that the economy is expected to maintain an impressive growth in 2007. He said, however, the Chinese government will put efficiency before speed and seek "to build a resources-efficient and environment-friendly society." By 2010, China will cut energy consumption of per unit of gross domestic product (GDP) by about 20 percent, reduce emissions of major pollutants by 10 percent and increase the recycle rate of industrial solid waste to 60 percent, he said. As the rural population accounts for over half of China's total population, he pledged the Chinese government "will continue to strive for coordinated development between rural and urban areas, and follow the principle of industry nurturing agriculture and cities supporting the countryside." To support agricultural development, promote rural prosperity and increase rural income are top priorities on China's modernization agenda, said Hua.

Hu calls on party to 'purify' the internet - Web users need more guidance, chief tells leaders
2007-01-25 SCMP
President Hu Jintao has vowed to "purify" the internet, state media reported last night, describing a top-level meeting that discussed ways to master the country's sprawling, unruly online population. Mr Hu, who is also the Communist Party chief, made the comments as the ruling party's Politburo - its 24-member leading council - was studying China's internet, which claimed 137 million registered users at the end of last year. Mr Hu did not directly mention censorship. However, he made it clear that the Communist Party was looking to ensure it keeps control of internet users, who are often more interested in salacious pictures, bloodthirsty games and political scandal than Marxist lessons. The party had to "strengthen administration and development of our country's internet culture", Mr Hu told the meeting on Tuesday, according to Xinhua. "Maintain the initiative in opinion on the internet and raise the level of guidance online," he said. "We must promote civilised running and use of the internet and purify the internet environment." In 2006, China's internet users grew by 26 million, or 23.4 per cent, year on year, to reach 10.5 per cent of the total population, the China Internet Network Information Centre said on Tuesday. The vast majority of those users have no access to overseas Chinese websites offering uncensored opinion and news critical of the ruling party. But even in heavily monitored China, news of official misdeeds and dissident opinion has been able to travel through online bulletin boards and weblogs. Mr Hu told officials to intensify control even as they seek to release the internet's economic potential. "Ensure that one hand grasps development while one hand grasps administration," he said.

No compensation adds insult to injury for victims of crime - Only 20pc of applicants receive timely payments, highlighting major flaw
2007-01-26 SCMP
Last month's execution of mass murderer Qiu Xinghua in Shaanxi brought little recompense to the families of his victims. Much of the media attention around Qiu's slaughter of 11 people centred on the killer's psychiatric condition, and donations poured in for his wife and children. But the case also highlighted a serious flaw in the country's civil code - that people cannot be compensated for criminal death or injury unless the criminal has some degree of wealth. Qiu died penniless. One woman whose father-in-law died at Qiu's hands said the family had filed a civil compensation demand, but there was still nothing to show for it. "Nobody is taking care of us, we are helpless," she said. "We lost our family member and feel heavy-hearted. Neglect of victims is neglect of justice." Only about 20 per cent of applicants for such compensation actually receive timely payouts, according to some estimates. Under mainland criminal law, victims have the right to ask for civil compensation from their assailants, but in the 80 per cent of unpaid cases, the criminals may not have the financial capacity to pay compensation, suspects may not be identified, or victims in urgent need of medical care may have to wait a long time to have their cases heard. The family of a Jiangxi boy killed and a girl who got sick after eating food tainted with rat poison had nobody to sue in 1998 when the main suspect, another farmer, could not be prosecuted because of insufficient evidence. The failure of many victims to get payouts has become a regular source of petitions and a serious headache for mainland authorities. The issue also caught the attention of the judicial authorities and there are signs of change. In the judiciary's annual planning session in Beijing this month, the country's most senior judge, Xiao Yang, told local courts to start work this year on creating a state-funded system for compensating victims who could not get redress through civil cases. The Criminology Institute of China, the Jiangxi People's Procuratorate and Supreme People's Procuratorate's Criminal Compensation Work Office met in July to discuss the possibility of establishing a state-funded compensation scheme for crime victims. The initiative was the work of Jiangxi chief prosecutor Sun Qian - a former vice-president of the Supreme People's Procuratorate. The three agencies are drafting legislation to realise the concept, and the draft will be presented to the annual meeting of the National People's Congress in March. Institute president Wang Mu said that in criminal cases, and especially those dealing with violent crimes, victims and assailants were usually at the bottom of the socio-economic ladder, offering victims few prospects of redress. "We have improved the protection of suspects' human rights ... but victims still may get nothing," Professor Wang said. "The real imbalance in the protection of attackers and victims may lead to social conflicts, such as petitions." He said that unlike in the past, the state had the financial resources to compensate crime victims. Wang Lin, an associate professor at Hainan University's law school, said the protection of crime victims would alleviate some of the pressure on the justice system exerted by petitioners and help bring about the "harmonious justice" advocated by Mr Xiao in the context of building a harmonious society, the key plank of President Hu Jintao's policy agenda. "The supreme court's review of all death sentences [starting from this year] will lead to fewer executions," Professor Wang said. "And victims may petition the Supreme Court in cases where criminals are not given a death sentence. Helping victims will help reduce petitions." But he said there should be legislation defining the types of cases covered and the payouts involved to guard against a drain on government finances. He also suggested the government, rather than the courts, should be responsible for administering the payouts. Outspoken Beijing-based lawyer Qian Lieyang said a law on state payments should be able to curb corruption and prevent the effort becoming an "image project". Mr Qian said judges already had some discretionary powers to encourage payments to victims. "If the convicted pay the victims civil compensation, the convicted may receive a relatively lenient term. This helps the victims secure civil compensation, and motivates the assailants to pay victims." He added that if the state decided to compensate victims, it would be crucial to determine what kinds of cases would be covered and how the scheme would be administered in order to avoid corruption.

Taiwan's Kuomintang Party, People First Party sign alliance agreement
2007-01-22 People's Daily Online
Taiwan's Kuomintang Party (KMT) and People First Party (PFP) signed an alliance Monday to strengthen cooperation in the "pan-blue" camp. The agreement ushers in an era of KMT and PFP cooperation, said KMT Chairman Ma Ying-jeo at the signing ceremony, pointing out that the two parties originally belonged to the same party and had similar beliefs. The antagonism between the "pan-blue" camp and the "pan-green" camp was painful to see, just like Taiwan's social turbulence and stagnant economy, Ma said. If the opposition parties do not unite, they will be ashamed to face the Taiwanese people, he said. Now that they have signed the agreement, they KMT and PFP will beef up cooperation in election nominations and in the policy area. Ma Ying-jeo, chairman of the Kuomintang Party, and James Soong, chairman of the People First Party, signed the agreement during a satellite video conference because Soong is currently overseas.

900 missiles 'target island'
2007-01-23 SCMP
Taiwan yesterday said the number of mainland missiles aimed at the island stood at 900, and slammed Beijing's recent satellite-destroying test as the behaviour of a "military superpower". "This action is ... bad for regional security," cabinet spokesman Cheng Wen-tsang said, after a Taiwanese military spokesman confirmed reports of the missiles pointing across the Taiwan Strait. "This does not fit with communist China's `peaceful rise'. They say one thing and do another." Taiwan's Mainland Affairs Council in August said the mainland had deployed about 820 missiles along its southeast coast. Mr Cheng said Taiwan opposed the reported test destroying a satellite as that of a "military superpower" and questioned Beijing's commitment to keeping peace in space. The latest missiles figure came days after Taiwan's legislature delayed voting on a bill that could authorise purchases of US military submarines and planes.

China's GDP grows 10.7% in 2006, fastest in 11 years
20067-01-26 China Daily
The economy turned in another sparkling performance last year, with gross domestic product (GDP) growing at the fastest clip in 11 years and inflation moving below 2 percent. The National Bureau of Statistics (NBS) yesterday announced that GDP grew by 10.7 percent to reach 20.94 trillion yuan ($2.68 trillion). The consumer price index, a key indicator of inflation, inched up by a mild 1.5 percent. "In 2006, the economy was in good condition," NBS Director Xie Fuzhan told a press conference organized by the State Council Information Office. The economy, which overtook Britain in 2005 to become the world's fourth biggest, is moving closer to that of Germany, which is estimated to have grown by 2.2 percent last year to $2.86 trillion. The World Bank predicts the Chinese economy will grow by 9.6 percent this year; and other mainstream economists put their forecasts at a minimum of 8.8 percent. That means the nation has a good chance to become the third biggest economic power by 2008 but Xie would only say that he believed "the economy will maintain a momentum of rapid, steady growth this year". In 2006, the economy grew on the back of strong growth in investment, exports and consumption. Fixed asset investment expanded by 24 percent, down two percentage points from in 2005. The government made strenuous efforts to tame investment growth last year to avoid overheating. The central bank twice jacked up interest rates and thrice raised the proportion of deposits that banks must hold in reserves. On January 15, it raised the required reserve ratio again. The central government cracked down, too, on investments that were against the country's development guidelines. Xie, who was a senior researcher at the State Council Development Research Centre before joining the NBS in October, said he was worried in 2005 that the economy was heading toward overheating. The cooling-down measures helped avoid that, he said. However, economists believe the authorities will not relax their tightening measures for credit and investment. In particular, a 2.8 percent growth in the consumer price index last month could well trigger a new interest rate hike or a further rise of the reserve ratio for banks, said Frank Gong, chief economist of JP Morgan. On the external front, the government may need to be more aggressive in dealing with its swelling trade surplus, said Ben Simpfendrer of the Royal Bank of Scotland. China's exports grew 27.2 percent in 2006 while imports expanded by 20 percent, resulting in a surplus of $177.5 billion, compared to $100 billion the previous year. The surging trade surplus has increased friction with trading partners. The country's hefty foreign exchange reserves, which can largely be attributed to the huge trade surplus, have also contributed to rapid investment growth by adding to the money available for lending by banks. "It is not in China's interests to have such a large trade surplus," said David Dollar, the World Bank's country director for China. China's top policy makers have said curbing the trade surplus will be a focal point for the country's economic endeavors this year. Stimulating domestic consumption will be another theme, as it has been in recent years. Growth of retail sales, a key indicator for consumption, accelerated by 13.7 percent last year as compared to 12.9 percent in 2005. But the rate still lagged behind investment growth by a big margin. Economists generally agree that the country needs to improve education, healthcare and social security systems to reduce the money that citizens have to put aside for these purposes. But that cannot be achieved overnight, Xie said. Dollar said China could collect dividends from profitable State enterprises and use the money to improve education and health systems which would reduce investment growth and increase consumption. [...]

PetroChina branch fined for pollution
2007-01-25 China Daily
Beijing - China's top environment watchdog has fined the Jilin Petrochemical Company, a subsidiary of PetroChina, the maximum 1 million yuan (125,000 U.S. dollars), for seriously polluting the Songhua River. An explosion at the company's chemical plant in northeast China's Jilin Province in November 2005 dumped about 100 tons of waste containing benzene into the nearby Songhua River. The incident forced cities along the river, including Harbin, capital of northeastern Heilongjiang Province downstream, to cut water supplies to 3.8 million people for several days. Under Chinese law, companies can only be fined a maximum of 1 million yuan (125,000 U.S. dollars) for causing pollution. The State Environmental Protection Administration (SEPA) found the company guilty of contravening the Environmental Protection Law and two articles of the law on Prevention and Control of Water Pollution. The incident triggered the resignation last year of China's former environmental chief Xie Zhenhua. As well 10 executives of PetroChina have received demerits on their personal record, including Duan Wende, senior vice president PetroChina. SEPA has rarely applied the heaviest penalty to companies that cause pollution, Thursday's China Youth Daily reported. Experts argued that the fine was inappropriately low considering the losses caused by the incident. Professor Wang Jin from the Peking University filed a lawsuit one month after the incident, demanding compensation of 10 billion yuan (1.25 billion U.S. dollars) from the company to restore the environment. The case was not accepted by the court, but sparked discussions over who should foot the bill for cleaning up the environment. The government spent huge sums during the pollution crisis and on the clean-up. It again highlighted an embarrassing situation for China's environmental protection departments which are constrained by the current legal and policy system, the newspaper said. The Environmental Protection Law has not been changed since 1989. Many complain it is too "soft" with fines that are too low and local environmental watchdogs have few teeth. Some companies find it is cheaper to pay a fine than it is to improve their pollution controls, the report said. In addition, companies can be fined only once for a particular pollution incident in a certain period, prompting experts to call for a system under which companies can be fined for each day they violate pollution laws.

A-share market to be 'third largest'
2007-01-23 China Daily
China's yuan-denominated A-share market will become the world's third largest in the next 10 years, with its value reaching $10 trillion in 2020. People would have been taken to be crazy had they forecast such a possibility one or two years ago when investors nearly lost hope in the bearish market. But the tide has turned now. As the stock market continues to make big gains and touch historical highs, analysts are getting optimistic and it's more likely that they have the small investors to back them up. The bold forecast was made by Hu Zuliu, general manager of Goldman Sachs Group (Asia), at China Capital Market Forum in Beijing on Saturday. And he was not alone. Wu Xiaoqiu, director of Renmin University of China's Finance and Securities Institute, which hosted the forum, corroborated him, and said the Chinese market would become one of the biggest in the world with the best fluidity by then. The performance of Chinese stocks, the second best in Asia last year has obviously fuelled their high spirit. In four of the previous five years, they dropped, only to rise by 80 percent last year. This year, the stock index is largely on the rise despite some recent corrections. Last year's boom was not accidental. A series of systematic adjustments in the previous years, when the market was in recession, laid the foundation for the rebound. Regulators have made some headway in strengthening corporate governance of listed companies and their information exposure, Hu said. "Breakthrough has also been achieved in (introducing) QFII (qualified foreign institutional investor) and the share merger reform, which boosted investor confidence." China launched QFII in 2003 and fine-tuned its rules last August, slashing the threshold to attract more overseas investment in its stock market. The combined QFII investment quota had exceeded $9 billion by last December. Insurance funds were allowed entry into the stock market in 2004, bringing in more capital to the thirsty market. "The bullish market has been built partly on the various sources of fund allowed in the market," said He Qiang, professor with the School of Finance, Central University of Finance and Economics. A move of more far-reaching consequence came in 2004, when the State Council released the so-called "nine-point" guideline. It is committed to improving the quality of listed companies and plugging loopholes of the market, the main causes of investor detachment. Securities regulators soon issued a series of rules to implement the guideline to correct the problematic market. In 2005, regulators cleansed the brokers market, disqualifying a number of brokerage firms that were embezzling investor funds and were guilty of other irregularities. The most crucial step to reconstruct the market, none would deny, was the smooth share merger reform. The reform, once a taboo for small investors, has proved to be a shot in the arm for the market because it has cleared the barriers for a smooth float of all types of shares. "It unifies interests of all investors, easing further reforms of the capital market," said Li Yongsen, professor with the China Youth University for Political Sciences. The revised Securities Law and Corporate Law, enforced from January 1, 2006, gave the legal back-up for the market boom. A year of boom has ushered in a string of changes, including improved investor sentiment. More than 175,000 people rushed to open stock accounts in a week at the end of 2006. But "don't be misled by the bustling world of money," warned Wang Zhongming, director of Research Center of the State-owned Assets Supervision and Administration Commission. "We still face many problems." Weak market mechanisms and poor financing efficiency are factors worrying Wang, but they can be eased out gradually as the market restructures. What can have a vital impact on the strategic change of the market is the return of some of the 320-plus major domestic companies, which have opted to list overseas, to the A-share market. "China must have its blue-chip market led by about 30 elite companies," said Ding Guorong, chairman of Shenyin and Wanguo Securities.

China says brisk diplomacy helpful to resume six-party talks
2007-01-24 People's Daily Online
China on Tuesday said the brisk diplomatic efforts on the Korean nuclear issue were helpful to resume the six-party talks. "We believe the frequent and extensive meetings following the December six-party talks are good for the next phase of the talks" Chinese Foreign Ministry spokesman Liu Jianchao said. Liu's comments came amid the meetings between the chief negotiators to the six-party talks, which involve China, the Democratic People's Republic of Korea (DPRK), the United States, the Republic of Korea(ROK), Russia and Japan. Chief U.S. negotiator Christopher Hill visited China on Sunday and Monday. Senior DPRK envoy Kim Kye Gwan arrived in Beijing on Monday. Both Hill and Kim met with their Chinese counterpart Wu Dawei, briefing Wu on DPRK-U.S. meetings in Berlin last week. Wu, who met with the ROK envoy Chun Yung-woo on Tuesday, is scheduled to meet with Japan's representative Kenichiro Sasae on Wednesday. The whirl of diplomacy has raised expectations that the six-party talks could resume soon, but the spokesman did not announce the date. "The parties are hoping for an early resumption of the talks," Liu said. All parties also hoped for progress on implementing a September 2005 joint statement, in which the DPRK agreed to abandon its nuclear program in exchange for economic aid and security guarantees. "As long as all parties keep constructive and cooperative attitudes, the six-party talks will restart soon and substantive steps will be taken towards implementing the joint statement," Liu said.

Civil Community Launched
2007-01-25 UB Post
A group of academics and professionals, led by Dr. D. Enkhbat, formally launched a new social organization on January 20 in Ulaanbaatar. Named Civil Community, the outfit will work for changes in the social system so that the standard of living of the average Mongolian is raise The organization already has more than 60 members, and its mission statement is: Let's Live Well in Mongolia. It hopes to establish a social system dominated by the interests of citizens and not by those of any political party, and also to strengthen the roots of democracy in the country. Civil Community appeals to all Mongolians who feel that the present system is marred by corruption, especially in the bureaucracy, and who wish to introduce some accountability in the system, to join it. Dr. Enkhbat, director of the New Policy institute, heads the board of the new organization. Its other members include the noted economist, D. Jargalsaikhan, the human rights lawyer, M. Ichinnorov, Ch. Tamir, who teaches at the Mongolian National University, and D. Lamjav. Civil Community plans to organize its first forum on February 4 when over 700 participants are expected from all over the country. The forum's main talking point will be to examine Mongolia's past and present systems and prepare a strategic plan to put into action to achieve its goals. The first international bonds floated by a Mongolian bank were sold out in one day's trading at the Singapore stock exchange on January 22. According to the Trade and Development Bank, 96 investors from 13 countries purchased its long- and medium-term bonds worth US$75 million. The bonds carry an interest rate of 8.625 percent and have a lock-in period of three years. Senior functionaries of the bank said at a press conference on Tuesday

US$75M of Bonds Sold Out
2007-01-25 UB Post
First International Offer Does Well that even though it had received several suggestions to offer bonds worth up to US$550 million, it had decided on a more conservative figure of US$150 million. Monday's offer was only part of this. Our original plan was to issue around US$60 million in the first instalment but realizing that investors would support a higher quantum, we decided to offer 25 percent more, said O. Orkhon, Deputy Chief Executive Officer. The bank is following the practice in the European Medium Term Notice market. The next offer is likely to be for a longer term with the same coupon rate. Moody's Investors Service, one of the three most respected international credit rating agencies, recently assigned a Ba2 rating to the Trade and Development Bank in both the bank deposit and bank issuer sections. This contributed largely to the investor confidence, as a Ba2 rating indicates a bank's ability to honour unsecured financial obligations and contracts. Orkhon said the bank would use the money from the bonds to finance the country's rapidly expanding housing program and to support entrepreneurs in small and medium enterprises. The availability of such large funds will help bring down long-term interest rates on housing loans, and also make such loans easier to access. Mongolian businessmen would also get more opportunity to invest in small and medium manufacturing industries. The bank finds Moody's rating important in various other ways. It would allow us to improve relationships with our counterparts as more and more international organizations are finding it difficult under their own risk and internal regulations to do business with unrated organizations. It will also allow us to better negotiate pricing and other terms of credit lines and other financing options, and to efficiently access international debt capital and syndicated loan markets. This will greatly help us diversify our operations in the global banking perspective, clarify strategic issues and factors that affect the credit quality of our organization, so that we can work on those areas, and maintain and further strengthen our leadership in the local market, and establish our presence in the international / regional market

Asgat Deal Annuled
2007-01-25 UB Post
The Mongolian State Property Committee has cancelled the agreement signed last month between the Russian company Polymetal and the Mongolian-Russian joint venture Mongolros- tsvetmet on the mining of polymetallic silver deposits at Asgat in northwestern Mongolia, close to the Russian border. The Mongolian authorities drastic intervention followed strong and widespread protests in the country from people who smelt corruption in the deal and called it illegal. The agreement was signed when Mongolian President N. Enkhbayar was in Russia on a state visit, and it gave each company 50/50 ownership. This would have been Polymetal's first business enterprise in Mongolia. Deputy Premier M.Enkhsaikhan, Minister of Industry and Commerce B. Jargalsaikhan and Chief of the Cabinet Secretariat Su. Batbold all claimed that the ownership provision was illegal as Mongolrostsvetmet, a company that is 51% owned by the Mongolian Government, had not discussed the details of the deal with any wing of the Government. The deposits, some of which lies over the Russian republics of Altai and Tuva, were discovered in 1976 by Soviet geologists. A ten-year exploration and research of the area, completed in 1991, estimated the reserves at over 3000 tons and the mineral reserves, just fewer than 5000 tons. It is thought the agreement failed because of a misunderstanding between different members of the Mongolian Government. This will not help Enkhbayar's wishes to build on an already successful relationship with the Russian mining industry, though several other members of Parliament will feel vindicated. The reserve has now been included in the Strategic Important Deposit list, which means a new tender for mining the deposit will now have to be floated. However, it is likely that Polymetal will not take this annulment decision lightly and will approach the Mongolian Government to negotiate a compromise.

Chung Vay-Luy
Embassy of Switzerland